someone asked about Silver mining costs

[Spartacus]

some time ago

http://www.fool.com/investing/genera...ble-again.aspx

other things to consider (as Ted Butler recently wrote about and I responded to in an earlier post) most Silver comes out of Copper/Zinc/Lead/Gold mines.

And those are shutting down too.

[Starving Steve]

Re: someone asked about Silver mining costs

Since silver is a by-product of copper mining ( as well as the by-product of the mining of other metals such as zinc ), there is ZERO cost to silver production. ZERO.

There is industrial demand for silver, but it is pretty thin. The photographic and X-ray demand is almost gone. There is some chemical demand, but not much. There is a tiny demand for silver for silverware, especially Grand Baroque sterling silver made in Boston.

There should be growing demand for silver for investment because silver is a monetary metal, along with gold. But so far, the demand for monetary (investment) silver is pretty thin.

With $30 TRILLION lost in world stock markets in the past few months, money is scarce, especially in the U.S. So, single digit silver prices are not a surprise.

[grapejelly]

where is you backup that industrial use of silver is so thin?

According to the Silver Institute:

Demand for silver is built on three main pillars: industrial and decorative uses, photography, and jewelry & silverware. Together, these three categories represent more than 95 percent of annual silver consumption. In 2007, 455.5 million ounces of silver were used for industrial applications, while over 128 million ounces of silver were committed to the photographic sector, 163.4 million ounces were consumed in the jewelry market, and 58.8 million ounces were used in the silverware market.

Seems like a lot of silver is used in industrial consumption, 455 million ounces. Now, that could slow down with the depression. But, on the other hand, a lot of new uses for silver have been found. My understanding is primarily as a disinfectant. They are using nano particles of silver in all sorts of things.

[Spartacus]

Re: someone asked about Silver mining costs

off the top of my head

mirrors (for a retail $30 mirror with 2 cents of Silver, it's not worth the cost of collection and melting & so on to recover the silver, unless the price goes way up ... and what's going to replace those mirrors?)

motors

switches / relays

brazing and soldering compounds (all the allegedly highest quality lugged steel bicycle frames use Silver)

chemical processing catalysts (despite the theory that catalysts are not used up, in practical use they are - they get fouled or abraded away & need to be replaced)

RFID (with millions and millions of these made, even a milligram per tag adds up, and I think it's much more than a milligram)
http://ieeexplore.ieee.org/Xplore/lo...015.pdf?temp=x

electrical contact stuff
http://platinumprocess.in/aboutsilver.html
"The ease of electrodeposition of silver accounts for silver’s widespread use in coating. The plating thickness of some items, such as fuse caps, is less than one micron although the silver then tarnishes more easily. Coatings of two to seven microns are normal for heavy duty electrical equipment."

[j4f2h0]

Re: someone asked about Silver mining costs

Since silver is a by-product of copper mining ( as well as the by-product of the mining of other metals such as zinc ), there is ZERO cost to silver production. ZERO.

There is industrial demand for silver, but it is pretty thin. The photographic and X-ray demand is almost gone. There is some chemical demand, but not much. There is a tiny demand for silver for silverware, especially Grand Baroque sterling silver made in Boston.

There should be growing demand for silver for investment because silver is a monetary metal, along with gold. But so far, the demand for monetary (investment) silver is pretty thin.

With $30 TRILLION lost in world stock markets in the past few months, money is scarce, especially in the U.S. So, single digit silver prices are not a surprise.

Nothing against u Steve, but the info u just posted is so dead wrong i cant even begin to show u the error in your thought process! Investor demand "thin" industrial demand "thin" were u joking??

[Guest]

Re: someone asked about Silver mining costs

Starving Steve - With respect for your many pithy comments on gold and silver - which are among the wisest around here IMO, you are not very up to date on the cost and demand underpinnings of this metal IMHO. It is a far more constrained market that gold, as only 7%-10% of silver is currently being drawn off the market for investment purposes, while silver supply/demand in commercial uses continues fairly well in equilibrium in recessions because mine production gets rapidly throttled by mine closures (70%+ of silver production from base metal mines which are closing in droves right now). With barely 7%-10% of it's consumption due to investment demand and a run on retail gold which is beginning to exert more offtake from the COMEX, LBMA, and TOCOM, you are just scratchikng the surface of potential investor demand for silver.

Meanwhile 85% of gold goes entirely for investment purposes already so there can't be nearly as large a potential rise in gold demand from 80% of it's annual production as there can be a rise in silver investment demand, which is still languishing at 7% of it's annual production. In short, what these percentages clearly point to is that silver only needs a tiny uptick further in investment demand to start seeing far more of a supply / demand squeeze than gold. It is tethered to gold, but gets mired in long slumps when gold slumps. To mistake that slumping action for a fundamental characteristic of extended recessions however is a notable strategic mistake.

I understand your deep skepticism about this metal but actually your assessments are all derived from some very old data, and you are not synthesizing the correct conclusions, which are in fact highly bullish for silver going out five years. I just spent $500 for an hour's consultation with the analyst David Bensimon, who is one of the most prestigious market analysts out there with mostly institutional clients - he's forecasting silver to run circles around gold going out 5-7 years from now. The eye opening information is out there, but if your skepticism gets in the way you won't discern it.

Both metals have an investment component in a world of monetary chaos. Gold has a much stronger investment component, but there is one very large trump card for silver which gold does not have. Gold is not consumed, silver is consumed in growing (not lessening) quantities, and the investment bid on it is a tiny fraction of it's annual production. That's only the start of the reasons to look more carefully at this metal. At ratios of 80/1 to gold it's got a very bright future indeed. BTW, Bensimon's forecast out in 2014-2015 for gold is humdrum, while for silver it is astounding. I place more trust in Bensimon's forecasts than I do even in EJ's and that's going some.

This "poor wastrel stepchild" of gold will leave you flat-footed in the train station, bewildered and wondering what comet of an investment just streaked past you, before this bull market is done. Bensimon tones his forecasts down to quite muted overal rise in gold in comparison.

_____________

CAVEAT: If the dung-pile of derivatives starts it's big tumble, or for that matter Citibank goes BK in the next month or two, "all bets are off" for the short term however and we could see a massive deflationary (sorry, "disinflationary") tumble. Silver is acutely vulnerable to such events, acting almost as rapidly as mercury in a thermometer. Therefore it's important to understand that even if someone of the reputability of Bensimon is pointing with very high assurance to silver prices well over $20 out two or three or four years from now, this is an investment class with all the "comfort margin" of a bungee jump out of a plane in gale force winds.

If Citi collapses for instance, you could see silver gap down temporarily to $6.00 an ounce. Maybe that does not seem huge from here, but for people who bought silver at $15 or $17 such volatility can be exceedingly dangerous - a momentary loss of nerve and you've sold near the bottom and locked in a catastrophic loss. Silver, especially owning large quantities of it, is D A N G E R O U S. But if you can hold it unflinchingly for five to seven years it's likely got some large upside from $10.

[ASH]

Re: someone asked about Silver mining costs

I just spent $500 for an hour's consultation with the analyst David Bensimon, who is one of the most prestigious market analysts out there with 80% institutional clients - he's forecasting silver to run circles around gold going out 5-7 years from now.

Hi Lukester -- you seem to spend a lot of money on professional analysis, and I wanted to thank you for sharing the occasional snippet. Regardless of how I or any other "low roller" might use the information you pass, the occasional report will be very helpful in the long run to gauge the usefulness of such services. (For that matter, since my PM holdings are split fairly evenly between gold and silver, I suppose I simply enjoy someone else talking my book!) So... thanks!

[Guest]

Re: someone asked about Silver mining costs

You got it ASH. I think Bensimon is a serious analyst - one of the better ones who's suggestions we should keep a close eye on. My sense from what he told me was that at very least silver is a **high probability** bet for an easy double from these depressed prices.

And I'm not letting on what he actually indicated it's upside was, but it was "multiples" of that. For an easy double in a precious metal with a 4 year time horizon, this would appear therefore to be a highly conservative investment.

Unfortunately a lot of people regard silver as a crappy or dubious investment vehicle, so it has a rep for being unreliable. But as with anything, if you can buy it cheap enough - the return becomes a very high probability bet.

BTW - I will gladly accept goodwill donations. You can send me a check for my nickel and dime advice, or a case of Oregon premium micro-brewed beer, or some bling. Whatever you send as a goodwill donation will be gladly accepted by this carpetbagging miscreant ... :p

Hi Lukester -- you seem to spend a lot of money on professional analysis, and I wanted to thank you for sharing the occasional snippet. Regardless of how I or any other "low roller" might use the information you pass, the occasional report will be very helpful in the long run to gauge the usefulness of such services. (For that matter, since my PM holdings are split fairly evenly between gold and silver, I suppose I simply enjoy someone else talking my book!) So... thanks!

[Nicolasd]

Re: someone asked about Silver mining costs

Luke, Would you accept canadian maple syrup as payment for those reassuring words of wisdom ;) ?

You got it ASH. I think Bensimon is a serious analyst - one of the better ones who's suggestions we should keep a close eye on. My sense from what he told me was that at very least silver is a **high probability** bet for an easy double from these depressed prices.

And I'm not letting on what he actually indicated it's upside was, but it was "multiples" of that. For an easy double in a precious metal with a 4 year time horizon, this would appear therefore to be a highly conservative investment.

Unfortunately a lot of people regard silver as a crappy or dubious investment vehicle, so it has a rep for being unreliable. But as with anything, if you can buy it cheap enough - the return becomes a very high probability bet.

BTW - I will gladly accept goodwill donations. You can send me a check for my nickel and dime advice, or a case of Oregon premium micro-brewed beer, or some bling. Whatever you send as a goodwill donation will be gladly accepted by this carpetbagging miscreant ... :p

[Guest]

Re: someone asked about Silver mining costs

No. I need some nice Canadian Scotch Whiskey. Do you guys in Montreal produce any Scotch? Maybe those Canadian Anglos are good for something after all, eh? Send me a nice case of Canadian Scotch and I'll gladly deposit some more nickel and dime "pearls of wisdom" here (this could be a good gig - deposit pearls of wisdom and get Canadian premium blended Scotch by UPS). :p

Luke, Would you accept canadian maple syrup as payment for those reassuring words of wisdom ;) ?

[Nicolasd]

Re: someone asked about Silver mining costs

Unfortunately , Scotch and anglos are brethen but have no standing relationship with the french connection. UPS does not work well here either.

In Quebec, we have micro-breweries , Italian wines , separatist party that comes to power once in a while , a hockey club and Celine Dion. Pick your poison.:p

No. I need some nice Canadian Scotch Whiskey. Do you guys in Montreal produce any Scotch? Maybe those Canadian Anglos are good for something after all, eh? Send me a nice case of Canadian Scotch and I'll gladly deposit some more nickel and dime "pearls of wisdom" here (this could be a good gig - deposit pearls of wisdom and get Canadian premium blended Scotch by UPS). :p

[Guest]

Re: someone asked about Silver mining costs

OK, then I'll take the Italian Wines and Celine Dion, and one lifeline telephone call, for $500?

Unfortunately , Scotch and anglos are brethen but have no standing relationship with the french connection. UPS does not work well here either.

In Quebec, we have micro-breweries , Italian wines , separatist party that comes to power once in a while , a hockey club and Celine Dion. Pick your poison.:p

[Nicolasd]

Re: someone asked about Silver mining costs

Oups , forgot to mention we also have an extremely high tax rate for the haves , thanks to the center-left separatists fiscal legacy so you won't go very far with the $500 better stay by the phone for another caller

Celine is coming Feb 11th to the Montreal Bell center whilst the Habs are resting .If you want to pedal you way here , I can arrange something.

[Starving Steve]

Re: someone asked about Silver mining costs

At 82:1 with gold, or whatever it is, I definitely prefer silver over gold as an investment. I would like to be buying silver 100:1 with gold, but the current ratio is not too bad.... It's tempting.

In the Lesser Depression, silver hit 32cents per oz. when gold was $35 per oz, so the ratio was 109:1. Considering the economic mess the world is in now, especially the U.S, 82:1 is no screaming buy either. We may see 110:1, and soon.

A few more minor comments: Silver has long been known to be a disinfectant. That is why silver is used for silverware, even nowadays.

Years ago, there was a very heavy industrial demand for silver, especially in electric contact points and in electrical wiring. But this has diminished in recent decades. X-ray demand is diminishing. Photographic demand is almost gone. There is still demand for silver in chemicals such as silver nitrate, but that demand is not large enough to push prices up.

I can remember when silver was used in tracheotomy tubes in hospitals, but that demand is long gone. Plastic tubes work just as well as silver tubes.

Mirrors will always need silver. Good luck in investing for that demand.

The biggest use for silver used to be for coins--- real coins that circulated, not fantasy coins for collectors. But this demand is all gone now. Silver coinage demand used to pressure world silver supplies, but that pressure is all gone now.

With deflation, I do not see much of a future for silver. Single digit prices are no surprise to me. However, this Bernankee and his stupidity is the wild card: Will the U.S. dollar be de-valued? And if the dollar is de-valued, the future for silver will be bright indeed. A run on the dollar, as forecast by Peter Schiff, would do wonders for the price of silver.

[GRG55]

Re: someone asked about Silver mining costs

Unfortunately , Scotch and anglos are brethen but have no standing relationship with the french connection. UPS does not work well here either.

In Quebec, we have micro-breweries , Italian wines , separatist party that comes to power once in a while , a hockey club and Celine Dion. Pick your poison.:p

Jeez Nicolasd...you forgot the Alouettes, who will be playing this weekend's Grey Cup game in your city in the Big "O", against our Calgary Stampeders. Enjoy the game.

Sorry the West is going to win though. No hard feelings we hope.
Maybe better luck next year...:cool: